How to develop an app like Instacart?

Posted On: May 11, 2022

Posted By: appsrhino

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Grocery shopping has always been about visiting crowded market spaces, vendors calling out for customers, and consuming a lot of time bargaining and searching for fresh products. This was the norm until coronavirus drastically changed our lives and behavioural patterns. It led to a drastic surge in demand for contactless and safe deliveries.

A significant impact was seen in the grocery industry as well. To avoid exposure, customers turned to grocery delivery apps. Instacart is one such grocery delivery app that has witnessed the heat of this boom. According to research conducted by 'The Information,' Instacart's sales boosted to $700 million during coronavirus.

Summary

Instacart has conquered new heights and has deployed great customer retention strategies. It has provided the customers with an opportunity to order groceries from the confines of their homes. Instacart is thriving in the market. Knowing more about how to compete in this world of on-demand app development, let's look at Instacart's business and revenue model.

Taking Inspiration from the Instacart model

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To succeed in the market of on-demand app development, let's walk you through some significant points that must be kept in mind while building your app:

  1. A quick and user-friendly app must be user-friendly to allow customers to order and purchase their products easily. It is well known that apps that are easy to operate increase customer satisfaction and compel customers to return for more transactions later. Instacart has a unique selling proposition and features like store selection, cart process, payment gateway etc.
  2. Increase the reach- To increase business and capture the market, it is essential to ensure that the business reaches its maximum potential. To increase the fame of your grocery app, add the names of retailers to the list of providers. Instacart provides a wide range of options under one single platform and makes it easy for customers to purchase more items.
  3. Provide attractive deals- Instacart has enormous popularity due to the deals and discounts it provides to its customers. This keeps the customers hooked to the app and invites new ones. This helps increase the customer base and get rewarded by increased sales and profits.
  4. Maintain customer demand- It is best to maintain liquidity in customer demand with contactless deliveries at the earliest and easiest way possible. Instacart gives the best services to the users at their doorstep. This keeps the customers satisfied and amplifies the results for the app.

Top features for grocery delivery apps

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Below highlighted are some of the must-have features for a grocery delivery app:

  1. On-demand grocery apps have a browsing option that helps customers browse through options and choose the products.
  2. Recommendations help users by giving notifications about products.
  3. Shopping lists help in finalizing the order.
  4. The cart helps in consolidating the list.
  5. Payment gateways provide different options for payment.
  6. Special offers broaden the customer base in the form of rewards and discounts.
  7. Order tracking helps in real-time delivery tracking of the products.
  8. Customers can schedule deliveries as per their time preferences.
  9. The wishlist helps in shortlisting products.
  10. Order management helps in scheduling the orders, cancellation, tracking, and monitoring orders, which streamlines the process for shopkeepers and gives customers the right to cancel their orders.

Instacart's 3 tier customer strategy

To build an on-demand grocery app, it is crucial to remember that it should have multiple tiers segregated. Instacart has three major parties- Shoppers, Individual Buyers, Grocery Stores:
  1. Shoppers offer delivery services as in-store shoppers or full-time shoppers. They are delivery contractors who deliver products to the consumers.
  2. Individual buyers use the app to browse through groceries online and then place their orders from the comforts of their homes. Buyers can select the place, time, and mode of payment and delivery.
  3. Grocery stores are service providers which offer retailer chains. These are independent, registered stores that operate under the name of Instacart. After entering into a particular contract with the host, they are listed on the website. They bring the business online and spread the word about it.
To create an app like Instacart, it is essential to familiarise yourself with its business model. Instacart acts as a host, and the contractors have the responsibility to manage the inventory and ensure the availability of goods.

Instacart's business model

An attractive business model considers the amalgamation of different partners, actors, resources, and segments.
  1. Key partners include the local grocery stores and grocery shoppers, which provide a wide range of products.
  2. Key activities include the creation of technological infrastructure, local market management, shopper management, and timely customer services.
  3. Key resources can be derived from partnerships with local stores and shoppers.
  4. There are different value propositions for shoppers, consumers, and stores.
  5. Shoppers get flexible working schedules and additional income.
  6. It is convenient for customers to shop groceries online and deliver them even in inclement weather.
  7. Stores are benefited by the increase in sales and number of customers.
  8. Cost structure includes the running cost of technological setup, salaries of employees, and commission to shoppers.
  9. Revenue streams are generated by surcharging the store price, charging delivery fees and membership fees.

Customer segments include-

  1. Like older adults, users who want groceries but don't like moving out.
  2. Shoppers who wish to gain additional income.
  3. The stores want to increase their sales and reach out to more people.
To run a successful grocery delivery app, it must include all these aspects to keep the users safe and secure. A suitable business model will help skyrocket the business and thrive in these difficult times.

Instacart's revenue model

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  1. Delivery fee- Instacart charges a delivery fee for all the orders except the first one. These charges depend upon the delivery time specified by customers and according to the minimum purchase requirements.
  2. Partner payments- Instacart has partnered with other companies to integrate its services into its grocery delivery app. This helps Instacart earn profit by charging commission and partnership fees.
  3. Markup fee- Retail stores list their products at higher costs, leaving room for generating profits. This revenue directly goes to Instacart.
  4. Service fee- Instacart charges a 5% service fee and a 5% shopper tip for every delivery. This helps it generate revenue streams.
  5. Membership fee- 'Instacart Express' is the annual membership that the customers enjoy. It includes free deliveries for large orders all around the year.
Related Articles: 

What is Instacart?

How to expand the grocery business with Instacart Clone or Grofers Clone?

How To Build On-Demand Grocery App Like Instacart